Is a million dollars in your future?By Jim Spore, CFP , Investment Representative, LaSalle St. Securities, L.L.C.located at IU Credit Union Investment Services, Inc. | |
| Does this loaded question conjure up visions of Ed McMahon and television cameras on your front lawn, or the dream of a long-lost uncle naming you in his will?
At one time or another, most people have expressed a desire to have $1 million without realizing that with smart day-to-day decisions, it could be an attainable goal!* And, it's well worth taking the time to investigate how you might accumulate it. First
of all, let's take a look at the amount of money you would have to invest each month at 10 percent to accumulate $1 million.
Years to Invest Investment Needed Per Month
--------------- ---------------------------
40 $188
30 $507
20 $1,455
There are many ways to increase the amount of your disposable income. Here are just a few that you might not have thought of:
• Are you one of the people who thinks you can't afford to invest? The truth is, you can't afford not to! It is surprising how many people make statements like, “I can't afford to invest,” and then eat lunch “out” five days a week, dropping an average of
$5 a day which easily totals $100 by month's end. What could $100 a month invested at 10 percent do?
Years Without Fast Food Value Meals Amount You Could Accumulate ----------------------------------- --------------------------- 10 $19,125 20 $68,730 30 $197,393• Do you still think you can't afford to invest? Let's take a look at the automobile you drive. While I am not out to destroy the auto industry, there is a fascinating relationship between annual income and the purchase price of an automobile. If someon e makes $18,000 per year and drives a $20,000 car, which statement becomes more logical, “I can't afford to invest,” or “I can't afford my car?” For example, let's assume you are choosing between an economy and a mid-sized vehicle, to be financed for 4 ye ars at 7.75 percent. The smart decision is to buy the cheaper economy vehicle, and invest the savings at 10 percent. If you trade your vehicle in every four years for a comparable selection based on today's monthly payment, your savings would be $210 a m onth. The chart below shows how $210 a month at 10 percent will grow over time.
Number of years Potential growth --------------- ---------------- 10 yrs. $40,162 20 yrs. $144,333 30 yrs. $414,525 40 yrs. $1,115,333Every dollar we take in requires a decision. Each time we spend our money we decide not to do an infinite number of other things with it. Vacations, nice cars and eating out may be an important part of why we work, but occasionally stop to think, “Shoul d I really eat $100,000 worth of fast food,” or “Will my upgraded trim packages postpone my retirement by 2.6 years?” Do yourself a favor and pay yourself first! And yeah, I want fries with that!
*These compound interest calculations do not represent any specific investment; the above examples are for illustrative purposes only. If your investment results are less than 10 percent per year, you would need more time or larger monthly investments
to accumulate $1 million. | |
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Publication date: October 13, 2000
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